When a property is about to be sold or has just changed hands while the tenant is still living inside, the biggest concern is usually not whether the sale can proceed, but:
- Will the tenant suddenly be asked to move out?
- Will the new owner refuse to honor the lease, demand a new contract, or try to remove the tenant?
- Who is responsible for the security deposit, and who should receive the rent going forward?
These questions are very common in practice and often leave both sides stuck: the former owner wants a smooth transfer, the buyer wants peace of mind, and the tenant wants stability and protection.
There is no need to panic. The law already provides clear answers. Let’s start with what the law says, then clarify three key points in order: whether the lease continues, how rent and the deposit are handled, and which situations are exceptions.
What Does the Law Say?
Civil Code Article 425:
“1. After the leased property has been delivered and is in the possession of the lessee, even if its ownership is transferred to a third party, the lease contract shall continue to exist against the transferee.
2. The preceding paragraph shall not apply to real estate leases that have not been notarized where the term exceeds five years or where the lease is of an indefinite duration.”
✨ Plain explanation: As long as the property has been leased and the tenant is in lawful possession, the lease remains valid even if the landlord sells or transfers ownership to another person. The new owner assumes the position of the original landlord, and the tenant may continue to occupy the property and perform obligations under the original lease.
This principle is commonly known as “sale does not break the lease”, intended to protect tenants’ housing rights and maintain stability in lease relationships.
However, note the exceptions:
- Lease term exceeding 5 years without notarization → not applicable
- Non-fixed-term lease without notarization → not applicable
⚖️ Legal Source: Civil Code Article 425 – Law.moj.gov.tw
Core Concept: Sale Does Not Break the Lease
The key to understanding what happens when a landlord sells a property lies in Civil Code Article 425.
As long as the tenant lawfully occupies the property, a transfer of ownership does not invalidate the lease. The new owner steps into the role of landlord, and the tenant continues under the existing lease terms.
Therefore, if someone demands early move-out solely because the property is being sold, the tenant generally has the right to refuse, since lease protections do not disappear when ownership changes.
Who Should Receive the Rent? What Happens to the Deposit?
After ownership transfer, the lease relationship typically transfers with the landlord’s status, and the new owner becomes the new lessor. In practice, confusion often arises when:
- Rent continues to be paid to the former owner
- The security deposit is not properly transferred, leading to disputes at move-out
To ensure a smooth transition, the handover should be clearly documented:
🧾 Confirm rent payment details
Notify the tenant in writing when rent should begin being paid to the new owner and provide updated payment instructions.
🔒 Document deposit transfer
The former and new owners should confirm that the deposit has been transferred and retain transfer records or receipts to prevent disputes later.
📝 Provide written confirmation if needed
A simple written confirmation can clarify who collects rent, who holds the deposit, and that the original lease remains valid.
Can the New Owner Require a New Lease?
After ownership transfer, the new owner legally assumes the rights and obligations of the original lease.
If the new owner wishes to modify terms, adopt a new contract format, or add conditions, these changes may be negotiated. However, any modification requires the tenant’s consent; neither party may unilaterally alter the lease.
If the tenant does not agree, the existing lease typically remains effective until expiration, after which new terms may be negotiated.
Important Exceptions: Not All Leases Qualify
Article 425 Paragraph 2 specifies situations where the rule does not apply:
- Fixed-term leases exceeding five years without notarization
- Non-fixed-term leases without notarization
In these cases, the new owner may refuse to assume the lease and request vacancy.
What About Foreclosure Sales?
In foreclosure situations, timing is critical:
- Lease signed before seizure → may still be protected
- Lease signed after seizure → protection is significantly weaker
What If the Lease Is Illegally Terminated Early?
In practice, buyers sometimes do not want to purchase property with an existing tenant and may pressure the former owner to remove the tenant.
If the lease remains valid but is unlawfully terminated early, the tenant may claim damages, including penalties, relocation costs, and other actual losses. The recoverable scope depends on contract terms and case-specific facts.
Can a Tenant Move Out Early Due to Concern?
If a tenant moves out voluntarily due to concerns about the new owner or deposit transfer, exemption from liability depends on early termination clauses in the lease. Most leases require payment of penalties or damages for early termination.
A safer approach is to clarify the handover, confirm the deposit transfer, and document rent payment arrangements to ensure a smooth transition.
👻Related Read: What Is a Non-Fixed-Term Lease in Taiwan?
🌕Related Read: How to Prevent Your Lease from Becoming Non-Fixed-Term in Taiwan?
🕸️Related Read: Can You Rent an Illegal Rooftop Addition in Taiwan?
🕷️ Related Read: Can a Landlord Raise Rent During the Lease Term in Taiwan?
Conclusion: Selling a Property Does Not End the Lease
In most cases, as long as the tenant lawfully occupies the property, a transfer of ownership does not terminate the lease. The new owner assumes the landlord’s role, and the tenant continues under the existing lease.
However, Article 425 provides exceptions, particularly for unnotarized leases exceeding five years or non-fixed-term leases. In practice, disputes often arise not from the legal principle itself, but from unclear handling of deposits and rent transfers.
By documenting rent instructions, deposit transfer, and lease succession, all parties can align expectations and turn a potentially disruptive ownership transfer into a smooth transition.
